Pub. 4 2019 Issue 4

9 ISSUE 3 2019 WhyHotel, which bills itself as a luxury pop-up hotel. “We’re taking 100-plus units on multiple oors at opening. As the building lls, we wind down our footprint.” During a three-year lease-up period, lling as many apart- ments as possible at the outset makes a big di erence. “We can lease entire oors and drastically shorten that time frame, allowing the owner of the building to make more money and better use of the property,” says Mason Harrison, Director of Communications for Sonder, another company that leases apartments and rents them for short-term stays. Some developers aren’t as willing to o er multiple oors, much less an entire building. James R. Borders, President of the No- vare Group, for instance, likes to limit short-term providers to one oor because residents can only access the oor on which they live on. Charlie Kuntz, Managing Director and Innovation O cer for Houston-based developer Hines, agrees. “If we can consol- idate that operation to a single oor, we nd it works better for [the providers], us and the residents,” he says. “ is way, residents on other oors don’t feel the transient nature of the short-term stay.” In addition to limiting the location of pop-up apartments, apartment owners and developers want exibility in the leasing arrangements. is makes sense, because developers say they don’t want a lot of inventory hitting the market at once. “Our agreements with these short-term providers state that we can take back those units if we want to,” says Lisa Newton, Senior Vice President of Multifamily Operations at Hines. Borders has had experience with corporate housing providers that break leases. He says it’s important to place stipulations on the partnership, speci cally regarding lease expiration. “ ey can’t eliminate their leases all at once,” he says. “Generally, the leases tend to be for one year, because that’s what’s required based on most loan documents.” Flexible leasing arrangements also enable operators to take back apartments if the market starts to heat up. Hines gives its short- term hotels and corporate providers staggered lease expirations. Novare Group builds exibility into its leases. “If there are problems, we can say, ‘ at’s the end of the lease,’ ” Borders says. Hospitality as Conversion Funnel and Amenity Most short-term-stay providers focus on putting their own stamp on their apartments by changing out the lights, wallpaper and other furnishings. Once they leave, they must restore the apartment to its original state. For Camden, these furnishings, even if placed temporarily, provide opportunities for new leases. “We don’t have models anymore,” Baker says. “If somebody wants to see one of the units, [the provider lets] us have access to them to show and to photograph.” Short-stay apartments can also persuade guests to live in the community for a longer period. “It’s a conversion funnel,” says Lyric’s Kitchell. “In many cases, guests stay with us for two weeks and then become long-term residents of that building.” When a short-term hotel rm rst came into a building that Bozzuto Management Co. operates in downtown Washington, D.C., Khushbu Sikaria, Bozzuto’s Vice President, Innovation and Product Development, says business consultants ended up in many of the short-term apartments. Sometimes they decide to stay.